MPC holds interest rates

INTEREST rates were pegged at the record low of 0.5% again today as the Bank of England resisted the temptation to pump more money into the flagging economy after last month’s £75bn injection.

The Bank raised its Quantitative Easing programme to £275bn in October amid fears over the strength of the economic recovery, which continue to grow amid the deepening Eurozone debt crisis.

Coverage of the MPC’s decisions is brought to TheBusinessDesk.com’s readers in association with stockbrokers Redmayne-Bentley.

Senior stockbroker David Scott said: “The fall of two democratic Governments in the single currency in the last week has escalated the Eurozone debt crisis into even more worrying territory and against this backdrop today’s decision by The Bank’s Monetary Policy Committee to hold interest rates at a record low of 0.5pc and its quantitative easing programme at £275bn after October’s shock increase, was expected.

“The MPC as it watches from the sidelines knows that its efforts to stimulate our economy are being more than neutralised by the chaos that is Europe and with its tool bag of options increasingly limited, it is more than aware that they have to be used sparingly in order to gain maximum effect.”

Although inflation remains more than double the Bank’s target of 2% policymakers are much more concerned by the threat of a second recession.

The Bank says inflation it is at a temporary peak and will fall in 2012.

The bleak picture in Europe – the UK’s biggest trading partner – was confirmed this morning when the European Union slashed ts growth forecast for the eurozone in 2012, from 1.8% down to just 0.5%.

European Commissioner Olli Rehn said: “Growth has stalled in Europe and there is a risk of a new recession.”

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